making fair trade work

[Guest guest]

i just wonder wot they do with the crocodiles in the nursery...hmmmmmm

 

Citizen Action in the Americas, No. 1

 

July 2002

 

Making Fair Trade Work in Mexico

 

by Talli Nauman

 

Americas Program, Interhemispheric Resource Center (IRC)

http://www.americaspolicy.org

 

In Mexico, a growing number of co-ops, nongovernmental

organizations (NGOs), microenterprises, and campesino groups

are proving that fair trade offers a viable alternative to

communities struggling to cope with globalization.

 

Little more than a generation ago, Mexico was the classic

example of a protectionist, shielded economy; over the past

25 years, however, it has become a leading global free

trader, boasting commercial accords with some 30 countries

worldwide. The terms of these agreements favor large

corporations and put Mexico’s numerous campesino farmers,

artisans, small producers, family establishments, and

independent service providers at a serious disadvantage.

Local economies in Mexico have suffered under the free trade

model and thousands of Mexicans have been forced off the

land or out of business, taking low-wage jobs in the cities

or crossing the U.S. border to find work.

 

Mexican artisans, farmers, campesino cooperatives, nonprofit

organizations, and small locally owned operations are

responding to the challenges of trade liberalization by

coming together to establish support networks that give them

access to start-up capital, product development, marketing

assistance, and foreign distribution outlets. Largely based

in the countryside--and many of them indigenous--these

entrepreneurs have until now been passed over by Mexico’s

insertion into the global economy.

 

Beyond securing incomes for themselves, participants in the

fair trade market are also promoting a working alternative

to current commercial practices, one grounded in the

principles of social equity and sustainable development.

Their efforts offer an example for other communities in the

Americas struggling with the challenges of economic

integration.

 

Fair Trade Objectives

 

Frequently, free trade means maximized profits for large

companies based in the developed world and minimized

benefits for producers in developing nations. Fair trade

seeks to establish more equitable economic relationships

between consumer markets in industrialized countries and

producers in the developing world.

 

For example, Central American coffee farmers selling through

regular channels in 1999 were paid an average of 38 cents

per pound by intermediary buyers. That same year, coffee

growers commercializing their product via the international

fair trade consortium TransFair earned no less than $1.26

per pound. They received a better price, in part because

TransFair passed on more of the profit to producers than

most coffee brokers do, and in part because TransFair has

identified a consumer base that is willing to pay more for

fair trade-certified coffee. The coffee is certified not

only because more of the profits from its sale are passed on

to small farmers in Central America, but also because those

farmers grow it in ways that are not environmentally

destructive.

 

Fair trade is driven by a market in which supply and demand

are guided by social conscience. A number of organizations

in Mexico have adapted fair trade principles to the Mexican

context. For instance, in 1998, Guadalajara, Jalisco--based

environmental NGO Colectivo Ecologista Jalisco convened a

workshop with European fair trade organizations in order to

define a set of fair trade objectives and principles. Their

conclusions: The needs of local and regional economies

should be a priority in business decisions; environmental

costs and social criteria should be taken into account in

every activity; undesirable intermediaries should be

eliminated to maximize financial benefits for producers;

product and producer diversity should be supported; and

local and regional goods and service providers, as well as

consumers, should cooperate to organize themselves; consumer

education should be promoted through reliable labeling,

communication, and publicity.

 

Other Mexican groups add that fair trade should increase

opportunities for women, especially in rural and indigenous

communities. One such group is the San Cristobal,

Chiapas-based Foro para el Desarrollo Sustentable, a

nonprofit project made up of more than a dozen NGO

specialists in fair trade that since 1997 has been providing

consultation and credit mechanisms to grassroots enterprises

working for improved living standards.

 

A key Mexican organization engaged in the fair trade effort

is the three-year-old Mexico City-based Bioplanet Network.

Bioplanet is in the process of refining a checklist of fair

trade practices that its producer members should follow.

Currently, for enterprises to receive the technical,

marketing, and financial support that Bioplanet has to offer

they must be located in a priority ecoregion, demonstrate a

commitment to conservation, be organized for social benefit,

and offer goods or services of special commercial interest.

 

Fair traders like Bioplanet also acknowledge that principles

alone will neither turn a profit nor lead to national and

international policies more supportive of fair trade

regimes. On the demand side, consumers want high-quality,

easily accessible products guaranteed to comply with free

trade principles. On the supply side, producers must be

trained in standard business techniques, quality control,

and marketing to meet consumer requirements.

 

Taking Action: Making Fair Trade Work in Mexico

 

So far, BioPlanet has connected 55 small business in 12 of

Mexico’s 32 states, to 10 consultants and funding agencies,

making it Mexico’s best-organized fair trade network.

 

According to founder Hector Marcelli, Bioplanet was

established to respond to the needs for greater horizontal

integration between small businesses in rural communities

and for their vertical integration with environmental and

fair trade marketing experts. This cooperation helps provide

the quick return on investment that small, cash-strapped

companies need to make it. So Bioplanet set up a system in

which producers purchase inputs from one another, share

expertise and even earnings, add value to agricultural

products through refining or processing, and effectively

target appropriate consumer markets.

 

Bioplanet technicians train producers in converting their

raw materials into finished items that are retailed on the

open market. Meanwhile, Bioplanet also encourages producer

members to trade both unrefined and value-added products

among themselves, knitting an expanding supply chain.

Network advisors help producers achieve high quality and

establish diversified product lines, allowing them to offer

consumers more choices and to capture a larger market share.

 

For example, with Bioplanet’s coaching in Oaxaca state, the

Mazunte Natural Cosmetics factory buys sesame oil from

Tomatal Ecological Producers and periodically expands its

line of bath and beauty items. Another fair trade outfit

participating in the Bioplanet network, Quali Traders of

Puebla state, has expanded the products it makes out of its

high-protein, native amaranth grain crop to include flour,

cookies, beverage mixes, and snack foods. The May First

Local Agricultural Association of Vanilla Producers, a group

of 200 indigenous Totonacas in Veracruz state--among the

first cultures to harvest vanilla beans--is acquiring

equipment and expertise that allows them to distill vanilla

extract, rather than selling unprocessed beans.

 

Bioplanet conducts analyses of demands and international

standards, which allows network members to better identify

market niches and interface with foreign economies. The

organization also helps member firms with labeling,

marketing, international trade show exhibits, and contracts

with big buyers. For instance, under the Bioplanet label of

organic, shade-grown coffee, cooperatives in all five of

Mexico’s coffee-producing states are now selling to the

offices of the federal government’s environmental

secretariat.

 

Meanwhile, Bioplanet’s online marketplace

(http://www.bioplaneta.com ) profiles goods- and

service-providers, and it offers an efficient online

ordering system similar to those used by other retailers. In

addition to penetrating markets, finding clients, and

selling goods, the network is helping members win

development grants, locate seed money, and enlist

volunteers. When Bioplanet invests in a new startup, it does

so on the condition that the new business earmarks an

equivalent amount of investment to eventually back another

new fair trade venture.

 

For instance, Mazunte Natural Cosmetics--established with

$10,000 of international public and private aid--set aside a

portion of its income for the San Rafael Toltepec Producers

Union, also based in Oaxaca, to build a chocolate processing

plant and another portion so that Ventanilla Ecotourism

Services could construct a visitors’ center at its crocodile

nursery near Mazunte. Like Mazunte Natural Cosmetics, the

Ventanilla endeavor became profitable, so now it is

providing tourism courses to entrepreneurs in the Tuxtlas

Community Ecotourism Network.

 

Building a Movement & Changing Policy

 

Most of the fair trade operators in Bioplanet started up in

the late 1990s. Still others date back as far as 15 years

ago, when Mexico’s environmental NGOs began to work with

them. One of these NGOs was EcoSolar, which provided the

capacity building that got businesses like Mazunte Natural

Cosmetics off the ground.

 

In addition to EcoSolar and Bioplanet, various other

networks are helping forge a fair market base in Mexico.

Figuring prominently among them is the nine-year-old,

nonprofit Network of Self-Determining Sustainable Growers

(RASA), a coalition of 28 cooperatives and other groups in

Guerrero state that are applying a nine-point Alternative

Sustainable Development Model to control the production,

processing, and marketing of the fruits of their labors,

mainly organically grown coffee beans.

 

Also an important actor, the nonprofit Asociación Nacional

de Empresas Comercia-lizadoras de Productores del Campo

(ANEC), formed in 1995, consists of 62,300 small-scale basic

grains producers located in more than half of Mexico’s

states. In the past couple of years it has been working with

Greenpeace Mexico to provide Mexican-grown, nontransgenic

corn to domestic tortilla makers.

 

The 60,000-strong Huichol indigenous population, with a

four-state territory, is conducting a fair trade experiment

of its own. It is undertaking organic garden sales and

ecotourism as part of the Project for the Integral

Reconstitution of the Wixarika Territory and Habitat,

designed to reestablish control over ancestral lands and

maintain cultural cohesion.

 

Examples of smaller networks include a regional committee of

the Eco-Stores Network founded in 1998. Some of its members

also participate in The Circle Network, and others are part

of the Healthy Harvest Network inaugurated in 1999, which in

turn is a member of Bioplanet.

 

In one of the most recent manifestations of these networks’

progress, Bioplanet is on the verge of getting the signature

of Mexico’s Economy Secretariat on an important covenant to

provide federal money and logistical support for exports of

fair trade goods.

 

EcoSolar, Bioplanet, and other Mexican fair trade boosters

form part of the larger Rural Sustainable Development

Network. This umbrella coalition of 90 institutions was

established to seek consensus and coordination regarding

proposals and government outreach efforts intended to spark

policy and structural changes that will help fair trade

prosper in Mexico.

 

The Commission for Environmental Cooperation (CEC), while

part of the official free-trade bureaucracy created under

the North American Free Trade Agreement (NAFTA), has

responded positively to citizen pressure for a fair trade

opening. Headed by the three top environmental authorities

of Mexico, the United States, and Canada, the CEC has

supported fair trade by allocating seed money to Mexican

producers of green goods and services and by conducting some

of the best research publicly available on the finance,

market, and public/private sector partnership mechanisms

that could be incorporated into national policy to support

Mexico’s incipient fair trade movement. Among the mechanisms

that the CEC has explored are the creation of government

procurement guidelines, government guarantees of loans to

fair traders, targeted subsidies, and labeling regimes.

 

But Bioplanet’s 55 members report selling only about

$100,000 worth of products annually and, so far, fair

trading remains on the fringe of Mexican national

development policy. Much more capacity building is necessary

for incipient fair traders to realize their potential,

enhance market impact, and affect policy.

 

Meanwhile, dozens of additional organizations are seeking

admission to the Bioplanet Network. In Oaxaca, 30 small

producers already work with Bioplanet, but its technicians

have identified some 3,000 rural production initiatives in

the state that could stand to benefit from the tools the

network provides. Many thousands more goods- and

service-providers around the country have aspirations to

enter the fair trade market, but their projects have such

modest outputs and organizational strengths that they cannot

even reach the bottom rung of the ladder.

 

Greater impetus is required for toppling the formidable

barriers that these entrepreneurs confront. Besides lack of

training and institutional capacity, these include: market

distortions engendered by subsidies to big, foreign-owned

corporate agriculture; unequal access to quality

certification and inappropriate certification schemes;

serious inconsistencies in the way that funds are

distributed by the federal Social Development Secretariat;

community infighting engendered by competition for resource

control between local factions; the high costs of

advertising and marketing; lack of consumer education

regarding fair trade goods and lack of access to those

goods; and higher product prices resulting from including

environmental costs in expenses.

 

Local-Global Linkages

 

The small businesses that form the base of the fair trade

movement in Mexico have established alliances with other

nonprofit organizations, both in Mexico and outside the

country.

 

Contributing to the gathering momentum of Mexico’s fair

trade movement is a broad range of NGOs organized under the

umbrella of the Red Mexicana de Acción Frente al Libre

Comercio (RMALC), which conducts research and advocacy

related to Mexican trade policy. Also supporting the effort

are alternative Mexican media outlets taking advantage of

internet technologies, notable among them LaNeta,

Planeta.com, and the Centro de Investigaciones Económicas y

Políticas de Acción Comunitaria (CIEPAC).

 

In turn, groups based in Mexico and the NAFTA-zone are

hitching up with a number of larger, transnational

organizations and networks operating at the global level to

forward the fair trade agenda. Ashoka: Innovators for the

Public is a worldwide grant foundation that supports many

fair traders in Mexico and other countries. The Max Haveelar

Foundation in Holland has been instrumental in establishing

direct-sales markets for products grown and manufactured

with environmentally friendly processes. These fair trade

pioneers have since been joined by the likes of TransFair,

Global Exchange, Environmental Defense, and the Center for a

New American Dream, among others.

 

Some of these international organizations focus on business

models and strategies that allow fair trade operations in

developing nations to penetrate first world markets. Others,

like the International Institute for Sustainable

Development, conduct research and analysis that clarify

perspectives on trade and development, much of which is

specifically oriented to the Americas. Taken together, this

broad spectrum of organizations operating both locally and

globally is pointing the way toward a different style of

globalization, one that is more grounded in principles of

sustainable development, social justice, and South-North

equity.

 

Already, entrepreneurs based in small, traditional, or

underserved communities across the Americas are mirroring

the efforts of fair traders in Mexico. (For more

information, see resources list on page 7.) These efforts

create the potential for a viable fair trade network

spanning the Americas that could strengthen local economies,

increase security for residents, raise living standards,

foster healthy communities, contribute to political

stability, and diminish migration pressures.

 

--Talli Nauman